Weather, Economics Affect Projects

By Bryan Sims | October 06, 2008
lants under construction in this month's issue of EPM are exhibiting a tremendous amount of resilience despite hardships brought on by unpredictable weather conditions during the hurricane season, and rising commodity prices. In addition, crude oil prices experienced their largest one-day point gain since trading began in 1984, rising more than $16 per barrel to a high of $130 per barrel in mid-September. By the end of the month, however, that price dove just below $100, perhaps reflecting the turbulence of today's economy.

Two of the biggest ethanol players in the industry—VeraSun Energy Corp. and Aventine Renewable Energy Inc.—have taken the brunt of rising commodity prices recently, which could hamper progress on their respective ethanol projects. Aventine, which is building facilities in Aurora, Neb., and Mt. Vernon, Ind., stated in a Sept. 17 filing through the U.S.

Securities and Exchange Commission that it may not have sufficient funds to finish its projects, and it's reevaluating whether it will delay construction and/or start-up at both sites.

Similarly, VeraSun confirmed in its Sept. 16 filing through the SEC that it has delayed construction of its plant in Welcome, Minn., and is waiting "until market conditions improve" because of profit losses it experienced in the corn futures markets. Construction continues at the company's Janesville, Minn., project with an expected start-up by the end of the year.

Despite commodity challenges, six ethanol plants recently completed construction: IGPC Ethanol Inc. in Aylmer, Ontario; Indiana Bio-Energy LLC in Bluffton, Ind.; Pacific Ethanol Stockton LLC in Stockton, Calif.; Platinum Ethanol LLC in Arthur, Iowa; Poet Biorefining-Fostoria in Fostoria, Ohio; and VeraSun Dyersville LLC in Dyersville, Iowa. These facilities represent a combined production capacity of 479 MMgy.

As for the projects continuing construction, workers are keeping pace by meeting respective schedules and deadlines, especially in the upper Midwest where preparations for impending winter weather are underway. For example, crews at Highwater Ethanol LLC in Lamberton, Minn., are making sure they enclose the distillers grains building, energy center and administration building before harsh weather hits. The site will include a place for workers to warm up and store excess building materials. Project Manager Robin Spaude said much of the project's dirt work should be completed by October before the ground freezes. "The administration building shell should be up in October," he added. "The water treatment plant building shell and roof should be up in November so that pipefitters can store their materials in it. Outside work will be a tough time for us this winter, that's for sure."